Greece PM says second bailout needed urgently

Reuters Staff

2 Min Read

BERLIN (Reuters) - Greek Prime Minister George Papandreou said the euro zone and International Monetary Fund must quickly approve a second bailout for his country to avoid its economic reform plans collapsing, a German newspaper reported.

Greece's Prime Minister George Papandreou addresses a news conference at the end of an European Union leaders summit in Brussels June 24, 2011. REUTERS/Eric Vidal

“The current mood doesn’t help us to get through this crisis,” Papandreou told the Financial Times Deutschland, in a brief preview of an interview to be published in the paper’s Thursday’s edition.

“This uncertainty scares investors. If we don’t get a decision soon supporting the second Greek programme so that the country can begin its far-reaching reforms, the programme itself could be held up.”

The prime minister said he was open to proposals currently being discussed in the euro zone about potentially using the existing euro zone bailout scheme — the European Financial Stability Facility (EFSF) — for Greece to buy back its debt.

“This idea could alleviate Greece’s debt burden and also its debt servicing costs,” Papandreou told the newspaper. But such issues had to be sorted out quickly: “It could theoretically take two weeks or much longer, which would cause much more damage.”

The 440 billion euro (388 billion pounds) EFSF, set up last year shortly after the first Greek bailout, has been used to help Ireland and Portugal.

Some in the European Central Bank and Germany have objected to such an idea, though the finance ministry in Berlin said on Wednesday such a move was “theoretically” possible already, suggesting a change in the German stance.

In another section of the interview released later, Papandreou said he hoped to hire private sector tax collectors to boost efforts to collect owed taxes and combat evasion.

“We will probably outsource this task to private companies, because we have the impression the state administration cannot do it and has not proven itself very effective in the task,” he said, adding that around 14,000 Greeks owed some 36 billion euros in taxes.